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Harvey Industries: A Case Study
Harvey Industries is a major name brand within a very niche industry. The company makes a variety of industrial products, mainly pressurized water systems used for washing and cleaning purposes. The company builds products to be used in a wide variety of contexts, including airplanes, cars, building maintenance, engines, swimming pools and more. One of its most lucrative avenues has been assembling equipment for coin-operated car washes. Still recent trends have negatively impacted Harvey Industries financial position. Despite sales of $1,238,674 last year, the company still managed to loose $17,174. This is a terrible financial condition for the company to be in. Examining the operations management subsequently shows clear issues which can be adjusted to ensure a more financial stability.
There are a number of reasons for the current financial distress of the company. First, the inventory control system is based on a reactive strategy, rather than a proactive one. Stock is replenished only when it is noticed to be too low, or when a customer orders an out-of-stock item. This leaves the company in a vulnerable situation, where they are left open to higher price demands and increased costs to acquire the needed stock. Not recognizing inventory shortages on time can dramatically cut into company profits (Brinlee 2012). A company pays the highest price for products when they are needed, rather than taking a more proactive strategy of keeping...
Harvey Industries relies on a limited number of vendors to supply a wide variety of repair parts. This, however, also leaves them open to vulnerabilities. These vendors can drive up prices, causing Harvey Industries to overpay. Also, there might be limitations in terms of the stock the vendors have on certain parts, which essentially limit the sales Harvey Industries can actually generate. Company research also showed that $220,684 of the $314,673 was used to purchase only 179 of the 973 different parts offered by Harvey Industries. As such, it is clear that the company may be suffering from in increased costs due to a lower bargaining position with only a few vendors. This limited number of vendors also places the company in danger of not being able to meet their own customer orders, as vendor delivery takes a dangerous role in impacting sales revenue (Connerly, 2003). As such, it is clear that supply management issues are contributing to the degraded financial position.
There are a number of recommendations that would improve profits from a supply chain management perspective. Working only with a few numbers of vendors places a company in danger of being at the whim of these vendor's demands (Stevenson 2011). External research also shows how this is an increasing danger when dealing with vendors…
References
Brinlee, Doug. (2012). Common inventory management problems. Inventory Management. Web. Retrieved September 20, 2012 from http://www.askdeb.com/inventory-management/problems/
Connerly, Bill. (2003). Four steps to overcome supply chain problems. Blue MauMau. Web. Retrieved September 20, 2012 from Stevenson, W.J. (2011). Operations Management
SCDigest. (2010). The five challenges of today's global supply chains. Supply Chain News. Web. Retrieved September 20, 2012 from http://www.scdigest.com/ASSETS/ON_TARGET/10-08-12-3.php?cid=3649
Stevenson, W.J. (2011). Operations Management. 11th ed. New York: McGraw Hill. Iwrin.
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